Quantum dotty for downtown Troy: Clint Photo: John Whipple

Tech Valley: Boom, Bust, or Buzz

Is the Capital Region really the heart of a new tech region - and if so, what does that mean?

By Miram Axel-Lute

I received an e-mail message recently from a Boston resident who is planning a move to Albany. In the message, he referred to “[the] corporation that may be moving to Albany and bringing tons of jobs—I forget the name of it, but I’m sure you know what I’m talking about.” I certainly did.

When Sematech, an international consortium of semiconductor manufacturers, announced in July 2002 that it was locating a research center (now known as “Sematech North”) at the University at Albany’s new nanotech center, the buzz was tremendous. Sematech, with whom Austin, Texas, rose and fell throughout the 1990s, had never located anywhere outside Austin since it settled there in 1988. The fact that snowbound, state-bureaucracy-reliant Albany won the location search was for most people startling, to say the least, and caused a frenzy of speculation.

Shortly afterward, Tokyo Electron, the world’s second largest producer of semiconductor manufacturing equipment, also committed to opening its first North American location outside of Austin in Albany Nanotech (now officially named NanoTech Resources, Inc.).

“Albany Catapults into Major Leagues of High Tech,” “Transforming Albany Into a High-Tech Mecca,” and “Albany Rising to the Top of Nation’s Nanotech Industry” crowed headlines around the country. The Capital Region was named a “New IT Job Hot Spot” in November 2002 by eWeek, which quoted Edward Moran of the financial-services firm Deloitte Touche as saying the region’s biggest challenge “will be training potential employees fast enough.” Local papers reported repeatedly that Austin has more than 100,000 people working in semiconductors, implying we may be next.

Papers in Austin, Boston, and Oregon wrote about how Albany was likely to be horning in on the industries they already had (or in the case of Oregon, wanted). “Massachusetts must clear a number of hurdles in a race against a rapidly deteriorating economy,” wrote Neil Aronson in the Boston Business Journal. “Now, to add insult to injury, we are losing to Albany, N.Y.”

Conventional wisdom had it that Sematech was bringing thousands of jobs, soon to be followed by other companies like Intel bringing thousands more. Rising housing prices were attributed to an impending influx of technology professionals. Up popped Tech Valley Road, Tech Valley Times, and proposals for a Tech Valley School and the Tech Valley River Rats. Tech Valley had lodged in the popular mind.

But a year after the trumpeting of Sematech North, a much quieter announcement was made: An attempt to get the Sematech headquarters relocated to Albany had fallen through. Sematech North now employs a grand total of seven people, expected to rise to 35 by 2006. All told, Albany Nanotech will account for a couple hundred jobs. So far, that’s less than the number of downtown state workers (out of 40,000 total) who took early retirement this year, points out John Poorman of the Capital District Transportation Committee.

Mike Merten, for one, hasn’t seen any growth yet. A network engineer for Southwest Bell Communications, he has to spend long periods of time on the road because “there’s just not enough work in Albany to sustain the business.”

This summer, the Buckingham Pond/Crestwood Neighborhood Association in Albany argued against a proposed luxury apartment tower in its neighborhood, saying it was unclear from recent development whether the high-tech workers it was meant to serve were coming.

Even Miguel Berger—who three years ago, against all advice, named his new real estate company Tech Valley Homes based on a “gut feeling”—says the recent rise in home prices has so far had to do with low interest rates, not a tech boom.

The numbers are inconclusive. Or more specifically, there really aren’t any hard numbers yet. New York State Department of Labor 1998-2008 statistics project healthy but not explosive growth for the Capital Region in a range of computer, scientific, and engineering occupations. They predict the region growing faster than the country and state in some areas—especially medical scientists—but lagging in others, including most of the computer-related professions.

On the other hand, these are projections, not forecasts, cautions Jim Ross, Capital Region analyst for the state Department of Labor. That means they are extrapolating from existing trends only, and don’t take into account “something that may or may not happen.” In other words, much of the anticipated growth—be it new companies moving in, spin-off growth from the research centers, or even the full impact of those research centers themselves—isn’t included in those numbers. “We’re already seeing high-tech growing at a faster pace than the overall economy,” says Ross. “The big anticipated growth would be in addition to that.”

“The Sematech people aren’t stupid,” says David Gibson, CEO at X-ray Optical Systems. “They didn’t choose [this area] by accident.”

Out-funded but determined: Stacy Jedynak, Bob Radliff, Bill Koebbeman, Andrea Austin. Photo: Leif Zurmuhlen

It seems that Sematech didn’t make Tech Valley. It just made Tech Valley visible. The region’s high-tech activity started long before any but the most geeky Capital Region residents had heard of Sematech. What people had heard of, however, was the universities.

The name Tech Valley wasn’t even a twinkle in the chamber of commerce’s eye when David Gibson started X-ray Optical Systems in the basement of UAlbany in 1991—as the first company supported by the university’s incubator. X-ray Optical makes various kinds of x-ray systems that are used for diagnostic and measurement purposes around the world. “I moved here specifically to start the company and be near the university because of the research being done,” says Gibson. The incubator allowed him to start out without risking a lot of capital on equipment. Today he employs 32 people at his East Greenbush location—on Tech Valley Road, no less.

Albany Molecular Research, which now employs 800 people, 600 to 650 of whom are in the Capital Region, also started in 1991, first in the undergraduate labs at Siena College, and then in Rensselaer Polytechnic Institute’s business incubator labs in Watervliet. “Tech companies, certainly biotech, tend to grow up and mature around research institutions and medical centers,” explains Dave Albert, AMR’s communications director. AMR serves pharmaceutical and biotech companies who want to outsource some of their chemistry research. It also does some proprietary research—which led to a patent on the active ingredient in the allergy medication Allegra.

These incubator grads have plenty of company. The hallway that leads over one of Troy’s treacherous inclines from the parking lot into the main building of RPI’s business incubator is crowded with colorful banners. Hanging from the ceiling, they each bear the name of another tech company that has graduated from the incubator. They’re only a foot apart, so you have to crane your neck up to read any of them. Even if you’re not counting the names as you go, by the time you reach the door to the lobby of “Building J,” it’s hard not to feel impressed—and to wonder where they will put the next graduates’ banners. Since its founding in 1980, the RPI incubator has graduated 150 companies, which have have enjoyed an 80 percent survival rate and created 2,000 jobs in the area.

“The incubators [RPI and UAlbany] have played a role in building the companies that we consider the pillars, that we think of when we ask what does Tech Valley really mean,” says Simon Balint, director of the RPI incubator. “Albany Molecular, MapInfo . . . all those companies can trace their roots back to the incubator programs.”

“When Rensselaer got involved in the tech park and the incubator, it was a new paradigm to bring together commercial enterprises with academic research,” Balint continues. “RPI did play a big role [in] . . . development of a new mindset where universities are actively involved in economic development.”

The region’s higher-education institutions took that mindset and ran with it. Across the country, says Karen Hitchcock, president of UAlbany, “universities are taking on more and more importance as being the source of innovation in high tech. That’s why the University at Albany is working so close with the private sector. . . . Having a nucleus of research that’s going on in an area is what attracts companies.”

By 1999—when the name Tech Valley was launched by the chambers of commerce for Albany, Schenectady and Rensselaer counties—the chambers counted 700 to 800 tech-related companies in the area. There are now 1,000. Of course, many of the extra couple hundred may have been here all along, acknowledges Steve Janack, vice president for communications and government relations for the Albany-Colonie Regional Chamber of Commerce.

They came for the universities, but they stayed for the “quality of life,” the increasing camaraderie in the field, and the feeling that the state government and universities were getting serious about wanting them to stay.

“You’re brought up believing it’s a state-government town and that’s it,” says Janack. “We need to educate people and make people feel proud. We have an incredible quality of life. God, I am such a chamber of commerce guy.”

But Janack isn’t alone in his assessment. “You can’t attract people to a place we consider to be horrid—I won’t list examples,” Gibson adds. “I hear people talk about ‘We can’t compete with New York City or Boston.’ I differ from that considerably. We don’t have as many nightclubs, but we have a reasonable number, and in terms of outdoor activities we have more. . . . You can afford housing here.”

“Companies are demanding access to intellectually stimulating environments,” says Balint, who adds that he’s seeing that kind of community growing in the region and companies interested in taking advantage of it.

When did this slow accretion of companies become the nationally known “Tech Valley”? Not when the name was first floated. “We went through the first few years and were laughed at by people who didn’t believe this area could be home to cutting-edge technology,” says Janack.

“The first time I heard the phrase Tech Valley . . . it sounded a little overreaching, to be honest,” recalls Deborah Ryan, CEO of business-software makers IA Systems. Ryan left the Capital Region for Silicon Valley in 1994 and returned in 2001. She came back for family reasons, and wasn’t expecting to be able to continue her high-tech career once she got here.

Clint Ballinger, CEO of Evident Technologies, which produces nanocrystals called “quantum dots,” recalls that “In 2000 I’d go around to give presentations to potential investors, and they’d ask, ‘When are you going to leave?’ Now we have customers from Japan who say ‘How can we be more involved in Tech Valley?’ ”

The change has been in both content and image. In terms of content, “critical mass” is a phrase you hear over and over from the leaders of tech firms in the area. “It was possible for us to stay because there’s an increasing amount of technology infrastructure,” says Gibson, listing off all the support services and businesses that have grown up in the area: machine shops, patent attorneys, engineers who work on contract. The Tech Valley Chamber Coalition has even expanded progressively to include 18 counties—from the Canadian border down to Orange County—in order to more fully present itself as a region, according to Janack.

“As I began to connect back into the community, [I found] the businesses had come together. . . . You could get the sense that they were having an impact,” says Ryan.

That coming together has been facilitated by active efforts on the part of the universities and the Center for Economic Growth, a group of business leaders. The Business Higher Education Roundtable, for example, cofounded by university leaders and CEOs, has been meeting to discuss various ways for universities and business to work together to improve the climate for high tech in region, from expanding health-care offerings to supporting workforce development to developing better telecommunications infrastructure.

CEG’s projects include the Beanstalk program, which aims to keep area graduates local by connecting them with internships at local companies, and the Technology Roadmap, which is an attempt to catalog who is out there in order to help various companies and researchers to connect and cooperate.

And, of course, there’s the commitment of the state, which has been doing everything from supporting the $400 million Albany Nanotech center to providing $100,000 grants to help companies like Evident get off the ground. “One of precursors was the willingness of the state,” says Gibson. “They don’t pay the whole bill, but they do strategic investment in areas that are necessary to make the rest work.”

“The benefit is a little intangible,” adds Ballinger. “It’s a feeling that [the high-tech industry in] New York state has government support . . . [especially] the information that’s flowing out to other states, investors, companies . . . ”

But it was still Sematech that launched the region into the national eye. “Sematech was the big fish that got everyone’s attention,” says Janack. “We sometimes talk to people who use Sematech and Tech Valley interchangeably.”

And once the big break happened, the fact that the Tech Valley marketing campaign was already in full swing made sure the region stayed in the spotlight. “If it wasn’t really happening, [the marketing] wouldn’t have had an effect at all,” says Gibson. “But given that it was happening, the labeling had an effect. The designation of Tech Valley changed more than I might have thought. Their saying it didn’t change anything that was available, but it was a significant change in awareness.”

At home on Tech Valley Road: David Gibson of X-ray Optical Systems. Photo: John Whipple

So we’ve been Tech Valley all along, and are poised to take the next step and reap greater benefits. But there are still some big questions up in the air. One of the most contentious is whether we concentrate on luring heavy hitters in manufacturing or on continuing to support the diverse web of locally rooted smaller companies.

No one is suggesting that we abandon the smaller companies. In fact, leaders like Janack are hoping to avoid the semiconductor-slump-induced economic woes of Austin by maintaining a diversity of companies in different industries. Five sectors in particular appear to be growing clusters in the area: nanotech, biotech, semiconductors, energy, and advanced materials, and there’s a healthy dose of pharmaceuticals, optics, and software for good measure. “We’re not reliant on one high-tech sector,” says Janack. “We don’t see this area as being susceptible to a downturn.”

“The companies [here] were not started up around the Internet boom,” adds Ryan. “They were started based on solid technology. . . . This enabled them to weather the storm of the late ’90s through 2001.”

“I think of Tech Valley as a collection of a lot of cutting-edge, fast-developing small companies,” explains Dave Gibson, describing the collegial atmosphere. “Most [tech areas] are known for a single industry. . . . For us, if any particular center is down, we’re not down and out.”

But nonetheless, attracting a mega semiconductor-chip-fabrication plant to the region has become a priority of the state and CEG, with backing from UAlbany. Proponents say that while most manufacturing is locating overseas, being near the semiconductor research happening at UAlbany will be an incentive to keep chip manufacturers at home.

But the plants are controversial. An attempt to prepare a “shovel-ready site” in North Greenbush in 1999 backfired when the town rejected the plans. A similar controversy is now brewing in Malta with the proposed Luther Forest Technology Campus. [See sidebar, page 16.]

Luring big established companies seems like an unfortunate departure from the ethos of Tech Valley to some, however. “It’s coarse-grained versus fine-grained strategies,” says Evident’s Ballinger. “When you have many companies, there’s the potential that many will do well. If that big manufacturing leaves the area, then what are you left with?” He points out that you get more bang for your public buck in supporting small companies as well. “A $100,000 grant to a small company could be enough to push them over the edge so they can explode with growth,” he says, “whereas $100,000 to entice a massive manufacturer, it’s nothing. It’s coffee for a day.”

“Schenectady and GE is an example of a town that became too dependent on one employer,” observes Andrea Austin, a resident of Malta who is opposing the development of a “mega-fab” plant there.

The other concern is hand-ling the growth that comes, be it a trickle or a boom. The sprawling effects of over-rapid growth are infamous, and many people fear that without adequate planning, it could disrupt the high quality of life that companies are relying on to attract their workforce. According to one national study, Albany-Schenectady-Troy is already the 19th most sprawling metropolitan area in the country.

From 1986 to 1997, the region was developing land at more than twice the rate of population growth, according to the Capital District Regional Planning Commission. And that development had “overwhelmingly sprawl characteristics,” says Todd Fabozzi, a regional expert in urban growth, “auto-dependent, segregated by land use, land-intensive.” So, many environmentalists and smart-growth advocates shudder to think what the region might look like if the population takes off.

“I haven’t seen any [of the high-tech growth] appearing in the city of Albany—the real city, not off in the Pine Bush,” says John Wolcott of Save the Pine Bush, who published an article a few years ago decrying the location of the Albany Nanotech complex on the fringes of the city and who has battled with the University at Albany before about building on the edges of the Pine Bush. And while most people are talking about the spin-off business the complex will generate, Wolcott is worrying about spin-off residential development. “There’s some concern that the research centers are going to generate more suburban development out in the Pine Bush,” he says.

But Fabozzi says the Albany Nanotech complex really is a central location. “It could be designed better, have better pedestrian access. . . . They could’ve built it on the other side of SUNY Albany, on the Harriman Campus site,” he says. “But at least it’s near a bus route.”

At least a few of the new companies are heading downtown. Inside the huge front doors at the Evident Technologies headquarters on River Street in Troy, there’s a solid wooden staircase that creaks satisfyingly. In the shiny new Evident offices on the second floor, CEO Clint Ballinger twirls the strings for the window blinds as he enthuses about his view. “You can see the antique district from here, the Troy Music Hall, the Hudson River,” he says. “We entertain different customers from all around the world, and they always comment about how neat the area is.”

Ballinger, who has a small manufacturing facility across the river in Watervliet, says locating downtown is particularly nice for a high-tech start-up thanks to “the convenience of an urban environment . . . with things in walking distance. You can work the nasty, long hours and do it in style,” he chuckles. “You can eat breakfast, lunch and dinner down here.”

But moving decisions aren’t always abstract. Deborah Ryan, who just moved IA Systems into larger space across the street from its former location in Colonie, has also looked into downtown space, in Albany. But she says her employees “have established day-care arrangements. . . . Their life is around here. We looked at several downtown locations, but it was difficult to uproot people from the choices they’ve already made.” Still, she says, she would look into it again in two to three years, especially if it continued to move toward being a place where people “live, work, and play. Not everyone wants the four-bedroom ranch in suburban Clifton Park.”

Overall, though, the pattern of where companies and residents locate is going to have more to do with proactive planning, infrastructure concerns, and transportation than with individual principles. Cities from Cohoes to Albany are laying fiber-optic cable and opening up business spaces that are wired with high-speed broadband. But the larger questions of public transportation, walkable communities, and curbing sprawl are basically still at the discussion stage.

Helen Desfosses, president of the Albany Common Council, has some specific ideas about what needs to be addressed, including optimal locations for housing, hooking up to public transportation, and training and coordination in land-use planning for planning boards. But she’s optimistic that the plans are moving along.

The Business Higher Education Roundtable has held a “series of meetings” on the transportation issue, says President Hitchcock. But when pushed about any action items, she falls quickly back into their plans for changing the area to attract more business, not managing other aspects of growth. “We’ve stimulated a lot of thinking, laid a good foundation,” says Miriam Trementozzi, point person for the roundtable. “We’re in the process of working out what our action plans will be.”

Everyone involved seems to agree that it’s a good idea that the discussions are happening, and especially that they’re happening on a regional level. “One of the reasons that Tech Valley got started was to break down some of these artificial barriers that tend to split communities,” says Janack. “In reality we’re all part of one region. Business people are not concerned about boundaries.”

Perhaps the entrepreneurial spirit of Tech Valley will give rise to some innovative new ideas in the planning field too. “A decade ago, this community felt like a victim of circumstance,” says Ballinger. “But Tech Valley is a community of entrepreneurship, which means recognizing you’re master of your own destiny. Tech Valley covers all the Hudson River towns that were depressed areas and are now taking an active stance. We’re not feeling like victims any more.”